FCA, which is responsible for overseeing the country’s financial markets, states that cryptocurrencies like bitcoin and Ether are “exchange tokens” and aren’t regulated through anti-money-laundering rules.
The latest guidance report on crypto-assets is a result of consultation paper CP19 released by FCA earlier in January. CP19 consultation paper states tokens such as Bitcoin, Litecoin and Ether didn’t come under existing rules. Following which, watchdog pointed out, “therefore authorization from the regulator is not needed.”
FCA Finalizes Guidance on Crypto Assets
According to FCA, they’ve received 92 responses to the consultation paper from wide-ranging firms, including banks, trade associations, and crypto exchanges. Most responses were in favor of the original proposal, the regulator said,
Following our consultation, we are proceeding with the guidance that was consulted on, with some drafting changes to improve clarity based on responses. This includes reframing our taxonomy of crypto assets to help market participants better understand whether tokens are regulated, and where they fall outside our remit,” the report reads.
The watchdog said in a statement that the report offers “better understanding of whether they need to be authorized,” and what action they need to follow to ensure “they are compliant.” The guidance report reads the definition of a security token, stablecoin, exchange tokens, utility tokens, and several other clarifications.
Clarifications and Definitions of Various Digital Assets
Exchange Tokens – cryptocurrencies such as Bitcoin and Ehtereum are the exchange tokens, and these tokens aren’t regulated but should comply with anti-money-laundering regulations.
Security Tokens – These tokens act like shares or debt instruments upon issuance. Security tokens carry ownership rights and also fall under the category of a specified investment, thus responsible under the watchdog’s remit.
Utility Tokens – On contrary to above definitions, a utility token doesn’t fall under FCA’s control except in circumstances when they act as electronic money and enters into the category of e-money tokens.
Stablecoin– FCA further states that certain stablecoins fall under the definition of e-money and henceforth fall under FCA’s control.
“Any token that is not a security token, or an e-money token is unregulated. However, market participants should note certain activities that use tokens may nevertheless be regulated, for example, when used to facilitate regulahted payments.”
In a detail report, the watchdog clearly states and guide market players to dig deeper and understand the definition of the digital assets they’re offering. Elaborating this, FCA said, “however, the definitive judgments can only be made on a case-by-case basis.” Furthermore, Christopher Woolard, executive director of Strategy and Competition at the FCA said in the guidance report;
“This is a small, complex and evolving market covering a broad range of activities. Today’s guidance will help clarify which crypto asset activities fall inside our regulatory perimeter.”
Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.